The State Worker

Chronicling civil-service life for California state workers

December 31, 2012
Airtime window closes today; higher taxes on Jan. 1 checks

An era ends today when CalPERS stops taking applications for additional retirement service credit purchases. Meanwhile, Jan. 1 state paychecks for workers paying into Social Security will reflect a new 2 percent tax increase on wages .

Starting tomorrow, CalPERS members can no longer buy up to five years of additional service time for purposes of pension calculations. Applications for airtime must be time-stamped by CalPERS' mail room by 5 p.m. today.

It's an expensive benefit, but a pretty good deal for those who can afford it, since the money is guaranteed by the fund to give the same return on investment that CalPERS assumed on its investments when the purchase was made.

For members who have applied for a cost estimate since Mar. 15, the guaranteed rate of return is 7.5 percent.

Few state workers will be hit by airtime's end, but most state workers who received their pay via direct deposit today have already noticed that their Social Security tax has gone from 4.2 percent to 6.2 percent.

The increase anticipated the end on New Year's Day of a 2 percent payroll tax cut for Social Security. Even though the Jan. 1 paychecks are for the December pay period, IRS instructions say the rate change affects state paychecks issued on Jan. 1.

Here's the memo from State Controller John Chiang's office that explains the situation in more detail:

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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